Why do firms enter an industry while they know that in long run economic profit will be zero?
Firms enter an industry while they expect to earn economic profit. These short-run profits are adequate to encourage entry. Zero economic profits in the long run imply normal returns to the factors of production, by including the labour and capital of the owners of firms. For instance, the owner of small business might experience positive accounting profits before the foregone wages from running the business are subtracted from these profits. If the revenue minus other costs is just equivalent to what could be earned elsewhere, then the owner is indifferent to staying in business or exiting.